May 21, 2019

May 21, 2019

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May 20, 2019

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Football clubs and eSports: A natural pairing?

For some people, the idea of watching someone else play a video game holds no appeal whatsoever. However, watching eSports is becoming an increasingly popular activity for millennials and Generation Z with viewing figures rivalling some traditional sports. As the audience for eSports grows, so do the revenues created by the industry. According to recent projections, annual revenue generated by eSports is set to reach US$2.96 billion in 2022.

Many long-established sporting institutions are well aware of the growth potential in eSports, with the opportunity to engage the prized 16-24 demographic one of eSports’ chief attractions. Football clubs in particular see natural synergies between their traditional activities and the burgeoning eSports sector. For example, West Ham United have a roster of two eSports players who represent the club in FIFA 19 competitions. Many other clubs have followed suit. However, not all football clubs limit their involvement in eSports to football video games. Bundesliga club Schalke 04 regularly compete in the European League of Legends Championship Series – a professional league for the multiplayer battle game ‘League of Legends’. As Schalke acknowledge, League of Legends is popular across the world and millions of fans livestream battles between professional teams in big championships. This gives the club an opportunity to diversify its fan base by building its reputation with a demographic that may not be natural followers of Schalke’s football team.

As more football clubs enter the world of eSports, they will need to consider carefully the players they engage together with the contractual and practical protections clubs put in place to safeguard their brand. Clubs will be conscious of the reputational risks of engaging eSports players. Cheating remains a prevalent issue in the eSports arena, with several high profile players found to have used cheat codes and fixed matches in recent years. Similarly, there have been numerous reports of doping in eSports, with allegations that several teams have utilised drugs such as ritalin to improve concentration when competing in matches. Clubs will seek to guard against these risks with robust morality clauses in player contracts, but practical steps, such as player education, may be more effective in ensuring the integrity of eSports teams and preventing cheating before it occurs.

Some eSports players already have sizeable fan bases and valuable personal brands of their own, with large numbers of followers on social media. Football clubs will be keen to tap into those fan bases but may find some conflict between the club’s own sponsors and any endorsement agreements the individuals have entered into prior to signing player contracts. In any case, football clubs will want at least some rights to use players’ gaming handles, images and, where possible, recordings of in-game action for promotional purposes. Clubs may also want to place restrictions on players’ entering into future endorsement deals which conflict with any sponsorship agreements the club may have in place.

More generally, eSports players and clubs alike will be concerned about how player remuneration is structured. It is common for eSports players to have substantial performance-related incentives in their playing contracts while certain eSports teams operate a revenue share arrangement whereby commercial revenue is shared amongst the team’s players. There is also a more fundamental question as to whether players are independent contractors or employees. Employment status comes with a series of rights and benefits for employees while imposing a number of practical and financial obligations on employers. Football clubs may prefer to engage players as contractors but they should consider the substantive relationship between the parties before seeking to ascribe the status of contractor to players in their playing contracts.

Some eSports leagues mandate certain minimum standards for player contracts, but the international and fragmented nature of eSports competition, in particular the disjointed way in which it is regulated, means that there is no one industry standard for new teams to refer to. Football clubs entering the eSports market will need to be mindful of any existing standards in the particular competition they are participating in, as well as players’ expectations, if they wish to attract the best players.

There are certainly opportunities in the eSports sector for football clubs looking to build their brand with a younger demographic. Indeed the two worlds are intersecting with increasing regularity, with several high-profile football players replicating dance moves from hit-games in their goal celebrations at the 2018 World Cup. It remains to be seen if football clubs can capitalise on the eSports boom, but for those entering the market, robust player contracts and sensible practical measures, such as player-education, will help to decrease clubs’ exposure to the reputational risks inherent in what is still a nascent industry.

© Copyright 2019 Squire Patton Boggs (US) LLP

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